Chart of the day improved, needs better data

Felix Salmon chose the following chart as his chart of the day. The chart originally appeared in this American Banker article.

The grouped column chart is one of the most over-used, least effective charts out there. While the message is simple -- that large banks have slashed offering free checking accounts between 2009 and 2011, this chart doesn't make it easy on the reader.

You have to jump over two columns to compare 96% and 34.6%. Then you have to find the legend to decode the colors. Then you have to jump through columns again to see the relative change for the other two types of institutions. (By the way, the practice of using font color in a legend is cute but perilous. There are lots of people who still use grayscale printers out there!)

There is an even better way to convey this information. Instead of grouping by year, group by type of institution. Like this:

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Now moving to a different corner of our Trifecta checkup, we find that the wrong data was used to analyze the situation.

The numbers given on the chart are proportions of institutions offering free checking accounts. So, if there are 10,000 banks in the U.S., and 8,000 offer free checking, the proportion is 80%.

Well, not all banks are created equal. In fact, we have "too big to fail" banks, and we have lots of small banks. This table here tells us that there are only 34 banks that have assets over $50 billion, and each of these banks likely have millions of checking accounts. This Bloomberg article tells us Chase has 10.8 million checking accounts under one roof. If Chase doesn't offer free checking, that impacts 10.8 million customers while a local credit union not offering free checking may only affect thousands of accounts.

So, to paint the proper picture, we'd need to divide the number of free checking accounts by the total number of checking accounts, or the number of customers who have at least one free checking account by the total number of customers who have at least one checking account.

Since it is the mega banks who are rushing to take away free checking, this chart based on number of banks rather than number of accounts severely under-reports the trend.